Mutual Fund Manager Agrees to Buyout

By REUTERS

Published: June 21, 2007

Nuveen Investments, a leading manager of closed-end mutual funds, agreed yesterday to be acquired for $5.75 billion by investors led by the private equity firm Madison Dearborn Partners. It would be one of the largest buyouts of an asset manager.

The investors offered $65 a share for Nuveen, 20 percent above the company's closing price on Tuesday. They also agreed to assume $550 million of debt.

Nuveen, whose clients include institutions and wealthy investors, becomes the latest financial services company to agree to a buyout in 2007. The company's $53 billion of closed-end fund assets, which trade over exchanges, are not subject to withdrawals and thus can generate steady fee income.

''The appeal is that the business doesn't require much capital and generates significant amounts of free cash flow,'' said Chris Hagedorn, a portfolio manager at Fifth Third Asset Management in Cincinnati, which owns Nuveen shares.

Nuveen and Madison Dearborn are based in Chicago. Other investors include affiliates of Citigroup, Deutsche Bank, Merrill Lynch, Morgan Stanley and Wachovia.

The buyout is expected to close by year-end. Nuveen said its board, with the assistance of Goldman Sachs, was entitled to solicit better offers through July 19 and planned to do so.

Nuveen shares rose $8.98, or 16.6 percent, to close at $63.14 in trading on the New York Stock Exchange.